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AEP Online |
Blaschke on Federal FundingUSED Non-Regulatory Guidance Creates New "Set Aside" and Clarifies Reallocation of Unspent EarmarksVery quietly at the end of May, USED issued Non-Regulatory Guidance on Title I Fiscal Issues including the conditions under which unspent earmarks for SES and staff development can be reallocated by districts for purchasing other Title I allowable products and services. Other issues addressed are: (a) under “consolidation” of Federal programs in Title I schoolwide programs, there is no requirement to report how such funds are spent; (b) requirements that districts identified for improvement must set aside ten percent for staff development each year; and (c) how “discretionary” funds provided to Title I schoolwide programs can be “commingled.” The new Guidance requires that districts that have schools in which choice and SES must be provided must take -- and document -- various efforts to ensure that all eligible students participate thereby spending the total 20 percent set aside. If the district can do so and it still has leftover Title I funds in the 20 percent set aside, the Guidance states, "On the other hand, if an LEA offers the opportunity to transfer to other schools and to receive SES to all eligible students and demand for those services does not absorb an amount equal to 20 percent of the LEA's allocation, the LEA may use those funds for other allowable activities during the year in which the reservation was made or carry over the unexpended balance and use those funds for any purposes for which carryover funds may be used." If the district cannot demonstrate and document the initiatives that were undertaken and part of the 20 percent set aside is unspent, then that portion must be carried over to the next year and once again set aside and reserved for SES or choice, but the district cannot count these funds as part of the 20 percent set aside for the next year. This area is a major bone of contention between third-party SES providers and school districts. In Florida, legislation has been passed and signed by Governor Jeb Bush which would require the majority of parents of students eligible for SES to document they do not want their child to participate in SES. Similar legislation is being considered in Ohio, South Carolina, California, and other states. The new guidance treats the ten percent staff development earmark for districts identified for improvement in a similar vein. It states, For example, under section 1116 (c)(7)(A)(iii) of Title I, an LEA that has been identified for school improvement must reserve and use 10 percent of its Title I, Part A allocation for professional development activities. The LEA does not have any flexibility to spend less. Thus, an LEA that has been identified for improvement in SY 2005-06 must spend at least 10 percent of its SY 2005-06 allocation, which first became available on July 1, 2005, within 27 months. Any funds that the LEA reserved for professional development in SY 2005-06, but did not use that year, must be carried over into SY 2006-07 and used for professional development activities. These carryover funds may not be used for other Title I purposes. In addition to the 2005-06 funds carried over for professional development activities, the LEA, if it is still identified for improvement in SY 2006-07, must also reserve 10 percent from its SY 2006-07 Title I, Part A allocation for professional development activities. Previous guidance for schools identified for improvement for the first time would not require them to earmark at least ten percent for professional development if the district could clearly demonstrate that teachers in a given school meet the “highly qualified” requirements under NCLB and justify that there was no need for professional development. This new Guidance should generate a much larger demand for professional development in districts identified for improvement, especially for firms that have partnered with districts which operated their own SES programs in prior years. The new Guidance on schoolwide programs reflects “unofficial” policies which have been enforced over the last several years. The Guidance restates that a schoolwide program can consolidate other Federal funds with Title I, use them to serve all students in the school not just those which are Title I eligible, and does not have to demonstrate that the services provided with Title I funds are supplemental to services that would be otherwise provided (i.e., supplement-but-not supplant provisions). It states, “Moreover, the school is not required to maintain separate fiscal accounting records by program that identify the specific activities supported by those particular [consolidated] funds….Each SEA must encourage schools to consolidate funds from Federal State, and local sources in their schoolwide programs and must eliminate State fiscal and accounting barriers so that these funds can be more easily consolidated.” In addition to clarifying how much of IDEA funds can be consolidated in a schoolwide program, the Guidance states that a schoolwide program may consolidate funds it receives from discretionary or competitive grants in addition to formula grants, with the exception of Reading First funds. While the proposed activities under the discretionary grant would still have to be performed, it states, “A schoolwide program would not need to account separately for specific expenditures of the consolidated Federal funds.” Competitive grants could include E²T² Title II D and 21st Century Community Learning Centers, among others. Even though the Guidance gives examples of how a schoolwide program can demonstrate that it supplements and does not supplant state and local funds, it concludes by stating, “A schoolwide program school is not expected to keep records of the particular services paid for with Federal education funds that are used in the schoolwide program, nor it is required to demonstrate that any particular service supplements the services regularly provided in that school.” Clearly, in a schoolwide program, Federal funds can be considered to be more of a “block grant” and will increasingly be treated as such by Federal auditors and monitoring teams.
Questions, ideas, or in need of more information? Please contact Stacey Pusey at 302-295-8349.
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Click here for a PDF of the guidance
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